hl rrb 001

CCP-504 (B). 8 CCP-504 (B). 8 11

ObjectivesObjectives:-:-

On completion of this period, you On completion of this period, you

would be able to Understand : would be able to Understand : the meaning of Regional Rural the meaning of Regional Rural

Banks (RRB) and need for RRBs.Banks (RRB) and need for RRBs.

the features of RRBs.the features of RRBs.

the functions of RRBs.the functions of RRBs.

CCP-504 (B). 8 CCP-504 (B). 8 22

(REGIONAL RURAL BANKS) R.R.B(REGIONAL RURAL BANKS) R.R.B

Meaning Meaning The Banks started in Rural Areas.The Banks started in Rural Areas.

To fill the gap in the Rural credit.To fill the gap in the Rural credit.

Sponsored by Commercial Banks.Sponsored by Commercial Banks.

Restricted to one or two Districts.Restricted to one or two Districts.

CCP-504 (B). 8 CCP-504 (B). 8 33

Regional Rural Regional Rural BanksBanks

Need for setting up of RRBsNeed for setting up of RRBs::

In the previous classes, you have learnt In the previous classes, you have learnt

about the functions of commercial banks about the functions of commercial banks

and agricultural banks.and agricultural banks.

Agricultural Banks mainly concentrate on Agricultural Banks mainly concentrate on

rural credit.rural credit.

CCP-504 (B). 8 CCP-504 (B). 8 44

Commercial banks also issue Commercial banks also issue

loans for priority sectors.loans for priority sectors.

So, is there any need to set up So, is there any need to set up

special type of banks to develop special type of banks to develop

rural areas?rural areas?

The answer is ‘Yes’The answer is ‘Yes’

Regional Rural BanksRegional Rural Banks

CCP-504 (B). 8 CCP-504 (B). 8 55

The establishment of RRB became The establishment of RRB became

necessary because the existing institutions necessary because the existing institutions

would not be able to fill the gaps in the would not be able to fill the gaps in the

rural credit institutional system.rural credit institutional system.

The Regional Rural Banks were set up in The Regional Rural Banks were set up in

1975 to fulfill one of the objectives of 20 1975 to fulfill one of the objectives of 20

point Economic Program.point Economic Program.


CCP-504 (B). 8 CCP-504 (B). 8 66

Objectives of setting up of RRB are :Objectives of setting up of RRB are :

1.Liquidation of rural indebtedness.1.Liquidation of rural indebtedness.

2.Provision of institutional credit to 2.Provision of institutional credit to

farmers, rural credit, rural artisans and farmers, rural credit, rural artisans and

weaker sections.weaker sections.

With the setting up of RRB, multi-agency With the setting up of RRB, multi-agency

approach was adopted towards rural approach was adopted towards rural

credit.credit.


CCP-504 (B). 8 CCP-504 (B). 8 77

Features of Regional Rural BanksFeatures of Regional Rural Banks

These banks were set up on the These banks were set up on the

recommendations of Narasimham recommendations of Narasimham

committee.committee.

Regional Rural Banks are the subsidiaries Regional Rural Banks are the subsidiaries

of public sector banks.of public sector banks.

These banks are scheduled commercial These banks are scheduled commercial

banks supported by government but banks supported by government but

sponsored by commercial banks.sponsored by commercial banks.

CCP-504 (B). 8 CCP-504 (B). 8 88

Share capital was subscribed by Central Share capital was subscribed by Central

Government, State Government and Government, State Government and

sponsoring bank.sponsoring bank.

Share capital subscribed by Central Share capital subscribed by Central

Government-50%, State Government-Government-50%, State Government-

35% and sponsoring bank-15%.35% and sponsoring bank-15%.

All types of assistance is given by All types of assistance is given by

sponsoring bank during first 5 years.sponsoring bank during first 5 years.

Features of Regional Rural Features of Regional Rural BanksBanks

CCP-504 (B). 8 CCP-504 (B). 8 99

The area of operation of a rural bank is limited The area of operation of a rural bank is limited

to one or two districts.to one or two districts.

The rate of interest charged by them shall not The rate of interest charged by them shall not

be higher than the prevailing rates of co-be higher than the prevailing rates of co-

operative societies.operative societies.

These banks get refinance facilities from These banks get refinance facilities from

NABARDNABARD

These banks also maintain cash reserves of 3% These banks also maintain cash reserves of 3%

of the total liabilities.of the total liabilities.


CCP-504 (B). 8 CCP-504 (B). 8 1010

Visakha Grameena Bank, Godavari Visakha Grameena Bank, Godavari

Grameena Bank are examples for RRB.Grameena Bank are examples for RRB.

These interests of the depositors are These interests of the depositors are

protected by the deposit insurance and protected by the deposit insurance and

credit guarantee corporation.credit guarantee corporation.


CCP-504 (B). 8 CCP-504 (B). 8 1111

Functions of Regional Rural Banks.Functions of Regional Rural Banks.

RRB perform the following functions.RRB perform the following functions. They provide credit facilities to agricultural They provide credit facilities to agricultural

sector.sector.

These bank also collect deposits from the These bank also collect deposits from the

public.public.

Emphasis is given to small and marginal Emphasis is given to small and marginal

farmers and agricultural labourers.farmers and agricultural labourers.

CCP-504 (B). 8 CCP-504 (B). 8 1212

They provide subsidiary services like They provide subsidiary services like

Commercial Banks.Commercial Banks.

They promote all round development of They promote all round development of

the villages.the villages.

They also help small business units and They also help small business units and

self-employment schemes.self-employment schemes.

Functions of Regional Rural Functions of Regional Rural Banks.Banks.

CCP-504 (B). 8 CCP-504 (B). 8 1313

SummarySummary

There is need for setting up of RRB to fill the There is need for setting up of RRB to fill the

credit gap rural areas.credit gap rural areas.

With the starting of RRB, multi-agency approach With the starting of RRB, multi-agency approach

was adopted to develop the rural areas.was adopted to develop the rural areas.

RRB are subsidiaries to public sector Banks.RRB are subsidiaries to public sector Banks.

Share capital is contributed by Central Share capital is contributed by Central

Government, State Government and Sponsoring Government, State Government and Sponsoring

Bank.Bank.

CCP-504 (B). 8 CCP-504 (B). 8 1414

They provide rural credit.They provide rural credit.

Emphasis is given to small and marginal Emphasis is given to small and marginal

farmers and agricultural labourers.farmers and agricultural labourers.

These banks perform all the functions of These banks perform all the functions of

Commercial Banks.Commercial Banks.

SummarySummary

CCP-504 (B). 8 CCP-504 (B). 8 1515

QuizQuiz

1.1. Regional Rural Banks were set up Regional Rural Banks were set up on the recommendations of which on the recommendations of which committee?committee?

A. NarasimhamA. Narasimham

B. RangarajanB. Rangarajan

C. RamanC. Raman

D. NoneD. None

CCP-504 (B). 8 CCP-504 (B). 8 1616

2.2. The RRB get refinance facilities The RRB get refinance facilities fromfrom

A. RBI A. RBI

B. NABARDB. NABARD

C. Central GovernmentC. Central Government

D. State GovernmentD. State Government

QuizQuiz

CCP-504 (B). 8 CCP-504 (B). 8 1717

3. RRBs concentrate on 3. RRBs concentrate on

AA. . Rural CreditRural Credit

B. Urban CreditB. Urban Credit

C. Housing LoansC. Housing Loans

D. NoneD. None

QuizQuiz

CCP-504 (B). 8 CCP-504 (B). 8 1818

Frequently Asked QuestionsFrequently Asked Questions

What are the features of Regional Rural What are the features of Regional Rural

Banks?Banks?

What are the functions of Regional What are the functions of Regional

Rural Banks?Rural Banks?

Explain the need for Regional Rural Explain the need for Regional Rural

Banks and their functions?Banks and their functions?

CCP-504 (B). 8 CCP-504 (B). 8 1919

Assignment:Assignment:

1.1. Visit a Grameena Bank of your area Visit a Grameena Bank of your area

and know which bank has sponsored and know which bank has sponsored

that bank?that bank?

2.2. Know the activities of that bank.Know the activities of that bank.

3.3. Know the various types of deposits and Know the various types of deposits and

loans offered by that bank.loans offered by that bank.

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